Two-limit Tobit Model Research Articles

Separate and Unequal: Post‐Tsunami Aid Distribution in Southern India*

Objective. Disasters are a regular occurrence throughout the world. Whether all eligible victims of a catastrophe receive similar amounts of aid from governments and donors following a crisis remains an open question.Methods. I use data on 62 similarly damaged inland fishing villages in five districts of southeastern India following the 2004 Indian Ocean tsunami to measure the causal influence of caste, location, wealth, and bridging social capital on the receipt of aid. Using two-limit tobit and negative binomial models, I investigate the factors that influence the time spent in refugee camps, receipt of an initial aid packet, and receipt of 4,000 rupees.Results. Caste, family status, and wealth proved to be powerful predictors of beneficiaries and nonbeneficiaries during the aid process.Conclusion. While many scholars and practitioners envision aid distribution as primarily a technocratic process, this research shows that discrimination and financial resources strongly affect the flow of disaster aid.

Exploratory analysis of prospects for renewable energy private investment in the U.S.

Opportunities for private investments in renewable energies were explored using a stated-preference investment allocation instrument. Allocation alternatives included conventional and renewable energy investments. Among renewable energy investments, solar and wind energy were ranked the highest while grass and wood-based technologies were at the bottom of the renewable energy list. This ranking mirrors the allocation of investments in sustainable energy technologies in global markets. Results were analyzed using a two-limit tobit model which suggests that certainty of investments, a diversified portfolio and expectation on financial returns were the primary drivers behind funds allocated to renewable energy investments. Using cluster analysis, twenty-three percent of our sample of current and future investors was identified as individuals most willing to invest in renewable energies.

Beef Producer Preferences and Purchase Decisions for Livestock Price Insurance

Personal interviews were conducted with beef cattle producers in Louisiana to determine their preferences and purchase decisions for livestock price insurance. Conjoint analysis was utilized to determine the importance of selected attributes of insurance policies for these producers. The characteristics of producers who prefer given attributes were also identified. Producers rated products given four economic situations to evaluate. A two-limit tobit model was used to estimate the part worth utility values for each attribute. Univariate probit models were estimated to evaluate the influence of producer characteristics on purchase decisions.

Determinants of Loan Interest Rates: Evidence from the Survey of Small Business Finances (SSBF)

This paper examines the predictors of the cost of credit to small business firms in the US using data from the 2003 Survey of Small Business Finances (SSBF). We estimate an empirical model of the cost of the firm's most recent loan and control for firm, loan contract, and lending relationship characteristics, using the Two-Limit Tobit model. Our results indicate that firms with less borrowing risk associated with them are able to get favorable rates. The volume of the loan and collateral also reduces the cost of the loan. We also find that firms who have a longer relationship and a greater scope of relationship with the lending institution get lower rates.

Repayment rate of loans from semi-formal financial institutions among small-scale farmers in Ethiopia: Two-limit Tobit analysis

Improving small-scale farmers’ access to credit is one of the ways of achieving increased agricultural productivity to reduce poverty in Ethiopia. In this study, a two-limit Tobit model was used to analyze the determinants of repayment rate of loans from semi-formal financial institutions among small-scale farmers in Ethiopia. Small group lending, was found to be related to the loan repayment rate of the farmers positively and significantly. Furthermore, agro-ecology, total land holding size, total livestock holding, experience in the use of agricultural extension services, contact with extension agents and income from off-farm activities were found to affect the loan repayment rate of the households significantly. Consideration of these factors would reduce default rates on borrowed funds from semi-formal credit sources in the area.

Consumer Likelihood to Purchase Chickens with Novel Production Attributes

Typical supermarket chickens are produced with novel or controversial attributes. This continues despite contrasting growth in consumer interest in organic and natural foods. This study surveyed Delaware consumers' likelihood to purchase chicken given different attributes: free range, given antibiotics, irradiated, fed genetically modified (GM) feed, GM chicken, and price. Examining conjoint analysis data with a heteroskedastic two-limit tobit model, GM chicken and other novel attributes were found to lower purchase likelihood significantly. Understanding these results should help the industry meet consumer preferences while aiding its continued expansion to benefit workers and growers across the South.

Estimating the Relative Success of Local Authorities at Labour-Market Integration of Immigrants

We propose a method for estimating indicators of the success of local authorities at integrating immigrants in the labour-market. The proportion of time in employment of individuals is used to measure labour-market integration, and we correct for differences in characteristics of immigrants and local labour markets using a two-limit Tobit model. This method is applied to a large administrative micro dataset which contains information on all immigrants in Denmark. We compare the estimated indicators of integration to corresponding uncorrected measures, and conclude that the corrections have a significant effect on the ranking of local authorities.

A Classification of Dutch Manufacturing based on a Model of Innovation

The paper studies the degree of homogeneity of innovative behavior in order to determine empirically an industry classification of Dutch manufacturing that can be used for policy purposes. Defining homogeneity in terms of an economic model distinguishes our classification from existing taxonomies such as those of the OECD, Pavitt and the various classifications based on a principal components analysis. We use a two-limit tobit model with sample selection, which explains the decisions by business enterprises to innovate and the impact these decisions have on the share of innovative sales. The model is estimated for eleven industries based on the Dutch Standard Industrial Classification (SBI 1993). A likelihood ratio (LR) test is then performed to test for equality of the parameters across industries. We find that Dutch manufacturing consists of three groups of industries in terms of innovative behavior, a high-tech group, a low-tech group and the industry of wood. The same pattern shows up in the three Dutch Community Innovation Surveys.

Analysis of Cardinal and Ordinal Assumptions in Conjoint Analysis

Of twenty-three agricultural economics conjoint analyses conducted between 1990 and 2001, seventeen used interval-rating scales, with estimation procedures varying widely. This study tests cardinality assumptions in conjoint analysis when interval-rating scales are used, and tests whether the ordered probit or two-limit tobit model is the most valid. Results indicate that cardinality assumptions are invalid, but estimates of the underlying utility scale for the two models do not differ. Thus, while the ordered probit model is theoretically more appealing, the two-limit tobit model may be more useful in practice, especially in cases with limited degrees of freedom, such as with individual-level conjoint models.

Modeling a Share or Proportion with Logit or Tobit: The Effect of Outcommuting on Retail Sales Leakages

In this study the effects of commuting and demographic variables on the amount and distribution of outshopping were modeled using household-level survey data in which the proportion of expenditures within specific categories of goods were reported across neighboring retail market areas. The effects on the propensity to shop outside the core study area were estimated using the two-limit tobit and logit models. Influences on the relative distribution of that outshopping were modeled by multinomial logit. The multinomial logit and tobit models were shown to produce similar estimates, with empirical results indicating that retail sales leakages are increased for outcommuters for certain types of goods.

Regulation of the Warsaw Stock Exchange: The portfolio allocation problem

The paper analyses the risk reduction effect of limits which are imposed on stock exchange price movements. As a result of the maximisation of traders’ utility functions subject to expected price constraints, a model similar to the capital asset pricing model ( CAPM) is developed, where the observed returns are corrected for the appearance of constraints. An analysis of returns from six securities traded on the Warsaw Stock Exchange has been carried out. The models have been estimated by the two-limit Tobit model and compared with the results for the corrected returns. The results show that the trade barriers increase the portfolio risk.

Modeling daily price limits

This paper characterizes the behavior of observed asset prices under price limits and proposes the use of two-limit truncated and Tobit regression models to analyze regression models whose dependent variable is subject to price limits. Through a proper arrangement of the sample, these two models, the estimation of which is easy to implement, are applied only to subsets of the sample under study, rather than the full sample. Using the estimation of simple linear regression model as an example, several Monte Carlo experiments are conducted to compare the performance of the maximum likelihood estimators (MLEs) based on these two models and a generalized method of moments (GMM) estimator developed by K. C. John Wei and R. Chiang. The results show that under different price limits and various distributional assumptions for the error terms, the MLEs based on the two-limit Tobit and truncated regression models and the GMM estimator perform reasonably well, while the naive OLS estimator is downward biased. Overall, the MLE based on the two-limit Tobit model outperforms the other estimators.

Increased Condom Use Among Teenage Males, 1988-1995: The Role of Attitudes

Understanding whether and to what degree changes in young men's attitudes explain increases in condom use over time can be useful in developing more effective disease prevention strategies. Data from the 1988 and the 1995 National Survey of Adolescent Males are used to determine changes in attitudes toward condoms, pregnancy prevention and HIV and AIDS. Two-limit tobit models are employed to investigate the association between these attitudes and condom-use behavior and to examine how this relationship may have changed over time. Between 1988 and 1995, young men's attitudes toward partner appreciation of condom use, condom-use embarrassment and pleasure reduction from condom use all changed in a direction suggestive of more consistent condom use. However, attitudes related to pregnancy prevention and AIDS avoidance changed in a direction suggestive of less-consistent condom use. Changes over time in the strength of the relationship between three attitude measures (masculinity, pleasure reduction and partner appreciation) and condom use also were predictive of lower levels of condom-use consistency. Only the strength of the relationship between condom-use embarrassment and consistent condom use changed in a direction corresponding to observed increases in rates of condom use among young men. Many of the significant changes in young males' attitudes toward condoms do not explain the increase in consistent condom use among adolescent males that occurred between 1988 and 1995. However increasing male contraceptive responsibility and emphasizing the risks and consequences of contracting HIV appear to be viable routes for policymakers to explore. Efforts particularly need to be targeted toward Hispanics.

Willingness to pay for rBST-free milk: a two-limit Tobit model analysis

The labelling of dairy products containing milk from rBST-treated cows has rapidly emerged as an important issue in the US due to the controversy between state and federal legislation and between consumer and industrial groups. This paper evaluates consumer willingness to pay (WTP) for rBST-free milk using data collected from a consumer survey. Estimation results of a two-limit Tobit model suggest that a majority of consumers are willing to pay a premium for rBST-free milk and the WTP is affected by several sociodemographic factors such as income and attitudes toward the use of rBST.

The Cost of Power Outages in the Business and Public Sectors in Israel: Revealed Preference vs. Subjective Valuation

Cross-section data on investment in back-up generators and uninterruptable power supplies (UPS) are used to infer the implied cost of electricity outages in the business and public sectors in Israel. Two-limit tobit models of the demand for back-up are estimated and used to simulate the mitigated and unmitigated cost of power outages. These "revealed preference estimates of outage costs are then compared with estimates based on the method of subjective evaluation.

A Gibbs sampling approach to the estimation of linear regression models under daily price limits

In this paper, we propose a Bayesian approach using the Gibbs sampler to estimate linear regression models in which the dependent variable, the stock return, is subject to a price limit regulation. Assuming that the underlying ‘true’ stock price process is not affected by the price limits, we show that the observed stock returns are serially correlated when the sample contains limit stock prices. The linear model is shown to be a variant of the two-limit Tobit model subject to some form of censoring rule, and a Gibbs sampling approach is proposed to estimate the model. Examples based on real data as well as simulated data are presented.

Application of Maximum Likelihood to a Bivariate Two-Limit Tobit Model for Estimation of Rural Retail Sales Potential

A bivariate likelihood function for a two-limit tobit model is developed and applied to the estimation of rural resident shopping patterns. Comparison of results from the univariate and bivariate models shows that parameters are estimated with more precision, and derivatives of conditional expectations are larger under the bivariate procedure. Results suggest rural commercial sector development plans should address a broad array of retail stores in order to capture the interdependencies of retail purchases.

A Conjoint Approach to Model Product Preferences: The New England Market for Fresh and Frozen Salmon

This paper illustrates how conjoint analysis can be used to model preference for food products, and applies the technique to the study of fresh and frozen salmon preference among buyers from two intermediary wholesale levels in New England. The degree of preference for specific attributes and levels of the products is compared. The paper also evaluates the performance and predictive validity of a traditional additive conjoint model, a hybrid model estimated using both ordinary least squares, and a maximum likelihood hybrid two-limit Tobit model.

A simultaneous equations model of zoning and land values

Simultaneous equations models with selectivity are estimated by maximum likehood procedures for four land uses. Zoning is a function of lagged land use and relative land values, and values are a function of land tract characteristics. Land value estimates are constructed for all tracts and uses, and are used as explanatory variables in two-limit Tobit models of zoning. Only for single-family residential land does zoning respond to incremental changes in relative land values. The study provides new evidence that zoning matters, and that single-family homes are a preferred land use.

Federal Criminal Sentencing: Some Measurement Issues with Application to Pre-Guideline Sentencing Disparity

Regression analysis is often used to study sentencing decisions. This paper presents a statistical model-a two-limit tobit model with heteroscedastic error terms-that is an improvement over techniques often used to analyze sentencing decisions. This model is applied to the sentences imposed on federal offenders convicted of bank robbery and the distribution of cocaine. Results are used to motivate a discussion of sentence disparity.